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Daily Base Metals Report

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US stocks made a comeback today and reached a 2 week high, a new stimulus package remains the key focus. It appears that negotiations have progressed with investors more upbeat about the chances of a deal. The first US presidential debate took place last night, there wasn't much conversation about policies and both candidates resorted to fingerpointing and personal attacks. We hope the next exchange is more insightful. The US dollar has weakened with the index trading at 93.917. Q2 GDP figures for the US and UK were released today, both as bad as expected at -31.4% Q/Q and -19.4% Q/Q, respectively. Other UK data saw GDP in Q2 on a Y/Y basis declined by -21.5% while private consumption fell by -23.6% Q/Q.

Sentiment on the LME was mixed again. Aluminium prices continue to struggle and closed at $1765/t with the cash to 3 month spread at -$36/t contango. The inflow of copper into the LME warehouses continues but this did not deter the bulls with prices testing resistance at $6,700/t but closed at $6,672/t. Lead prices failed into $1,850/t  and this triggered a close at $1,824.5/t. Zinc prices broke below $2,400/t, but the market managed to close at $2,403/t. Nickel was range-bound today and closed at $14,517/t. 

WTI edged higher to $39.84/bl as we saw crude inventories fall 1.9m barrels and some optimism arise from the prospect of another round of stimulus. Brent trades at 40.84/bl, down -0.5%. Gold has recovered from earlier losses but is struggling to break above $1,900/oz, and trades at $1,896.89/oz at the time of writing. Silver weakened once again today, with prices trading at $23.77/oz.  

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COVID cases are rising across the globe as the delta variant spreads, this is causing some nervousness in financial markets, especially with the higher inflation rhetoric. Commodity prices have fallen since the Fed changed their tune inflation, the dollar has stabilised which has also been a headwind to prices. The summer months are traditionally quieter for metals demand which could prompt metals to consolidate. If the delta variant continues to spread, we may see higher levels of stimulus for longer. As things stand stimulus levels are set to be tapered and this could be brought forward if inflation remains high. We expect markets to remain volatile but on lower volume through the summer months.